President Obama has declared war on Ireland, the Netherlands and Bermuda, and is giving Silicon Valley a long hard stare as he overhauls America's tax system to bankroll his campaign pledges. The White House has unveiled proposals to clamp down on US firms it reckons are hiding profits overseas to benefit from lower tax rates, …
Be careful when it comes to headlines about the US declaring war. It happens all too often and could be taken literally.
What about Delaware where many american companies are registered and which bring the same kinds of benefits as thos foreign countries ?
How come Obama never talks about that uh ?
Low tax my arse
"... three small, low-tax countries". I think you should clarify that. Ireland's only low tax if you've got the audacity to bung you friendly neighbourhood politico a brown paper envelope. The place is a fucking banana republic without the sunny weather and beaches.
Disclaimer: Formerly of the Rep. of Ireland (the official name of the country to all you Sasanachs that insist on calling it "Southern Ireland"). Not that my current country of residence is much better.
Holland a low-tax country ?!?!?!?!
You must be joking, right?
Maybe it is for the big bad multinationals, but certainly not for its mere-mortal inhabitants.
100 billion USD....
...is about a 30th of the Iraq war unofficial total.
And that's before the coming hyperinflation due to overheating printing presses.
Well of course
Obama's a Harvard lawyer and Chicago politician. Of *course* he's going to tax the hell out of anyone who's trying to make money by aiming a loaded IRS at their head. If he really wants tax reform, he can start with his own candidates for his cabinet.
Netherlands - low tax?
Huh? Have I tripped across into some parallel universe?
at 52%, I struggle to believe anyone could call Dutch tax 'low'
Is tax due on pots of gold?
Looks like Obama is making the same stupid error that Gordon Brown has been making for years.
The solution is very simple, ( but clearly too difficult for politicians to grasp ) , don't condem other countries for their low taxes and the companies who gain an advantage from them....
Cut your own taxes to the same level !
The difficult concept for tax - loving leaders is that by cutting taxes you may get more revenue, not less.
I imagine quite a few jobs will be created to explore the possibility of moving to Ireland lock-stock-and-barrel.
Because Delaware is still within the United States. While it may possess various tax benefits on the state level, any company in Delaware must still submit to *federal* tax rules which remain unaffected whether you're in Delaware, Florida, or California.
Ireland's IT isn't in a mess
Dell didn't leave Ireland. They moved their manuafacturing to Poland but kept the high skilled divisions in Limerick, Ireland. They just downsized.
Ireland's IT isn't in a mess. Intel, Microsoft, Google have huge operating there, and more IT companies have recently setup operations there.
It's the banks with toxic property loans that are in trouble.
US kids just want to play basketball?
That's in *marked* contrast with everywhere else in the world, then, where the majority of kids spend their entire day indoors writing Python scripts.
Be carefull.. very very carefull...
.. don't fuck with the Irish.
Or did Obama not see The Long Good Friday?
Paris. As rumour has it she also has not.. er done.. an Irish yet.
Could someone define what an "American" company is? As far as I can tell, a company incorporated in Ireland is probably not American.
Ooh look, globalisation has down-sides as well as upsides! Who'dathunkit?
Have you ever noticed the rhetoric is against small countries? What would happen if China took the same attitude to the US that the US is taking towards Ireland?
Has Obama looked at the state of Irish economy? If its benefiting from outside cash, someone's keeping it really quiet.
You live by globalisation, you die by globalisation.
addressing existing imbalances
Those who fight the proposals will be on soggy moral territory, they're the ones who've benefited from the loophole till now. I'd be surprised if he stops at the three countries, they will perhaps be markers of success.
R&D expenses can be fairly low in HiTech, compared to their legal and takeover costs - Microsoft might be the exception, though what they get for their money is another question. While a pure software company like Oracle might find it easy to move, Hardware sellers might find it harder.
Company tax isn't really comparable with personal taxes, though often one goes up when the other sinks. I'd be very happy to pay high rates on what is left at the end of the year, if I could exchange for VAT and income tax.
Kids and engineering
So kids in the US don't like going into hard subjects like sciences/engineering. They are not stupid. A BS in business (easier to finish) pays more than a BS in engineering (had to finish). So which would you do when faced with this choice. (OK - I am an idiot I have a PhD in Physics.)
BTW - chinese and Indian universities graduate an order of magnitude more engineers than the US... While some of them are very good - lots are of questionable quality. (I'd only trust kids from the IITs and a few other places in India.) In the US - most are at least good (a few very good) with a few precent who are really weak (the ITTs in the US).
Python scripts? Surely old Monty isn't being brought back? Although, let's face it, some current government thinking on both sides of the Atlantic would be more suited to being part of a cult TV comedy classic.
It's not about taxes -- all's he has to do is debase the currency enough, and trillions turn into billions. When it comes to economics, the man is out of his league -- and when it comes to law, he's been cutting his own throat. The backlash against this ought to be interesting -- he used to be classified as a harmless imbecile by the foreign governments that paid to bring him to power -- now that he poses a threat, the fur ought to fly. The one thing you should always remember in politics -- if you are bought, stay bought.
Britain Finally Wins
Isn't it ironic that a country that was founded because it didn't like paying taxes without voting rights has managed to develop an institution like the IRS over the years. If you're in any way associated with the US you're going to be taxed wherever you are in the world, whether you've got a vote on the matter or not, and the IRS will find you wherever you try to hide.
It is amazing the nummber of comments above from people who do not understand what is happening.
These companies are avoiding paying tax anywher.e
Re: Ireland's IT isn't in a mess
"Ireland's IT isn't in a mess. Intel, Microsoft, Google have huge operating there, and more IT companies have recently setup operations there."
Yes, behold the reason Charlie "McGreedy" McCreevy has to sneak in European legislation pandering to those companies' interests every five minutes.
Some commentators are confused (e.g. citing high levels of personal tax in the Netherlands). This is all about Corporate tax. Accenture, a big US concern, are officially based in Bermuda and pay a lot lower tax compared to if they were based in the US.
Ireland benefited from this, the UK lost many jobs to Ireland. Now Ireland will lose many jobs to the lower tax economies of Eastern Europe... having benefited, they can't complain ! Ireland has had the benefit of native English speakers though.
It's also equally appalling to think that the alledged $100 billion in savings is really just a drop in the bucket compared to the amount the US Gov't spends annually.
Yet another example of policitians supporting a "Tax and Spend" policy. How about cutting the stupid fucking budget and just not SPENDING the money on fish hatcheries and $30000 hammers?
Mines the one with "Bermuda or Bust" on the back...
The reason that a lot of international companies operate (partly) from the Netherlands is not the low tax per se, but the finely woven web of international tax treaties and the ability to offset losses in one country with profits in another country. VERY effective for your bottom line!
The laffer curve. And why it doesn't mean what you think it means
"The difficult concept for tax - loving leaders is that by cutting taxes you may get more revenue, not less."
Why do arguments citing the Laffer curve always misrepresent it? Without fail?
Who gives a shit. It's a war and we all love a good war. Just a shame we John Wayne isn't around to win another one for us.
Besides who was it exactly that told tech companies they could invest all their R&D funds into rum, cabanas, Guiness, leprechauns, cheese and wooden shoes? This is precisely what happens when you let hippies hopped up on acid run your accounts departments. But then again is that really much of a surprise when you consider where all these so-called tech businesses come from? Bloody Californians and their hippy tendencies.
I love it. Tax the word "American"
If you suffer the misfortune of having a US passport you pay twice for the privilege;: local and to the US. It appears any semblance of a US office is now also an excuse to tax.
Having said that, the current system DOES need changing. A world earner such as MS has apparently been playing the "sponsor your legislator" game so well it has yet to pay any corporate tax in the US (well, probably nowhere). Yet it expects the state to take care of the thousands it's kicking out to ensure they can maintain executive pay.
I'm more worried about where it will end!
IMO this is a protectionist policy . Nothing has been mentioned about wether this is a 2 way street for taxation of non-us companies in the US .The current crisis has been caused by toxic debt generated in the US and distributed worldwide... no accountability there either.
As far as Ireland is concerned, remember this
1) It hasn't joined Schengen
2) Lisbon 2 is coming up.
3) It isn't in NATO .... other European countries might decide not to continue paying for it also.
4) The IRS have threatened the Revenue Commissioners before for disclosure .... RC told 'en to feck off.... they'd tax them themselves.I can see this increasing in frequency
Couple this with the fact that a very high proportion of americans don't posess a passport,and a turbulent economy , Multinationals could split into US and separate Non-US companies, and another Iron curtain could descend.(See Opel-Fiat , Cadbury-Schweppes more to follow )
I wouldn't worry about Ireland ... I'd worry about Canada.
'New' tax credit just political slight of hand
The "Research and Experimentation Tax Credit" is just a distraction. From Bloomberg (http://www.bloomberg.com/apps/news?pid=20601087&sid=a4.7CIfqd5h0&refer=home):
"Obama’s proposal would divert the revenue it collects to making permanent a research and experimentation tax credit that is popular with many of the same businesses protesting the end of the tax-deferral rules, the administration official said. That credit, which has expired 13 times, is due to expire again Dec. 31; while the research credit is renewed only temporarily, there has been only one year since 1986 when it and the tax deferral rules haven’t been on the books at the same time."
So, they're not 'redistributing' the tax -- they're just taxing more. Very nice political slight of hand, calling something that's existed for 23 years 'temporary' and promising to make it permanent (i.e. do effectively nothing.)
Anonymous so I don't get the White House press corps after me like Perella Weinberg.
Brains, send more brains...
The whole argument that Bill Gates and now The Reg is making about their being a lack of talent in the US is wrong.
The brains are there, as evidence all one need look at is the massive amount of foreign students that cram US universities, driving up tuition and sucking down financial US tax money in the form of financial aid.
The real problem is that Bill Gates and other multinational monopolies don't want to pay a fair rate for the skill set never mind the education. They would rather hire a graduate from the University of Xerox then actually pay for skills.
Like the film deep impact America now has a black president just when the country aint worth a shit anymore.
They'll just have to learn...
Be nice to the rich people. If you don't, they'll go elsewhere, and then your country's even more screwed than ever.
Hurrah for the Dutchies
It seems the incompetent zealot that dumped the dutchies on the list has had their wrist slapped, and I no longer live in a tax haven.
Mark Haanen's hit the nail on the head, and I understand Obama's ire: all of these companies would have to pay tax on these cash transfers if they were all based in the US. Of course, I don't know why he thinks they would shift their operation to the US if the Dutchies changed their tax law...
realy dont get it do that...
For a start personal tax is not the same as corprate tax. Just because you pay 50% tax it dose not meen a company dose. Infact that is an indecator that you are paid more, because the company can afford to.
Also, small countrys can have low tax because they are small. They lower there tax and lots of companys move there for tax reasons, so more than make it up. Litchtenstine (SP?) has more companys than people. Big countrys cannot do this because they cannot attract enough companys to make up the loss.
All the US wants is companys to play fair and not game the system.
People really don't understand...
Governments are going to tax both people and the companies that they work for. Why? Because governments have to supply infrastructure, defense, court systems, eduction, etc. to support both sets of entities.
The only real question is how much gets taken out of YOUR pocket, as a worker, and how much gets taken out of your EMPLOYER'S pockets, before he pays himself 10,000 times more than he pays you. For years now companies have learned to game the system with international incorporation and subsidiaries, managing to declare actual INCOME in countries with little or no taxes, and declare LOSSES in counties like the US that actually have realistic taxes on corporate earnings - it's very simple to do, the lower tax country simply invoices the higher tax country subsidiary for "services" or "consulting" and the income is transfered (that's the simple version, there are a range of ways to game it). And the loser of that? US employees, who have to make that difference up out of their personal taxes, or loss of services.
Stop crying for the companies - they are sticking it to the individual tax payer. They are only going to pay their workers what the market will bear, so it's not like they are going to give you a raise because they pay less tax (a typical right-wingnut arguement against corporate taxes of any kind).
I am convinced that MOST companies would actually pay a fair and balanced tax as long as their competitors had to, at least in the US. The problem is that once a few started using havens, they all felt they had to to look good to investors. Obama is trying to reset that game, and hopefully he will be successful.
The bottom line forms at the ...
If we here in the US don't make things here in the US that folks in other countries want to buy, we won't be able to pay the rest of you for the things you already sold us. Or the loans you made us.
Not that this is a US-only problem, when even Japan Inc. is outsourcing to China.
Feedback is important
Yeah but this one I'm taking advantage of as I don't have any US based customer ... so I happily bring euros in the US economy and that's want O wants. So no double standards here.
But Ireland may retaliate aiming at that specific Delaware (Florida and Nevada are on the list too).
Obama is taking the helm with a firm grip and determination. I see nothing wrong with that. everyone has to pay taxes, trying to avoid them will eventually get you caught between the dock and the ship one day. That day is today.
Avast ye mateys!
"Isn't it ironic that a country that was founded because it didn't like paying taxes without voting rights has managed to develop an institution like the IRS over the years."
The American Revolution was a bit more complex than that, though the taxation part is about all the minds of teachers can handle. And they don't like to talk about it because they get paid by local property taxes.
The IRS was originally created in that grass-roots, reform-minded, hate-the-wealthy muckraking period near the beginning of the 20th century. Whatever their arguments, the main impulse was to stick it to the rich. This nation has come so far in 100 years.
I Sometimes Think ...
... everything I need to know about politics came from watching Yes (Prime) Minister on PBS. Taxation isn't about what you need to do. It's about getting as much as you think you can get away with, then figuring out how to spend it.
of course after just ten years after the American Revolution, Americans were paying more in tax than to the British. lol.
I like the American tax system coz I get more money back after deductions than the UK system lol.
Sales tax only 8% not 15%, cheap petrol/gas, the only down side to living in the Southern California is Americans, while a few are great (about 20%) the rest are either thick, bigots, or you have to treat them like big kids. It is hard work at times.
After INDIA, now IRELAND...
First Obama was after INDIA, not after IRELAND.
1. Turn Indian flag 90 degree right, it resembles Irish Flag.
2. Country Flags have same Tri-Colors "Saffron-White-Green" combination.
3. Both Countries starts with "I".
I don't know if flag takes another 90 degree turn, it will represent which country,
but sure Obama is heading 180 degree. believe me!!!